Bursting Bubbles

The Future of Food According to Silicon Valley Is Bleak

Last month, a $700 smart juicer called Juicero made headlines. “The Keurig for juice,” news outlets crowed. The way it worked was a Silicon Valley techie’s dream. Buy the juicer. Buy the I.V.-like packs of pulverized fruit and vegetables (retail cost: between $4 and $10 each, available for purchase via smartphone app). Insert a pack into the sleek device. Press a button (make sure your Internet’s working, though—Juicero is Wi-Fi enabled). Enjoy your fresh-pressed green juice. Big-name, institutional Silicon Valley investors like Kleiner Perkins and Google Ventures funneled money into the start-up with the belief that it would “change the way fruits and vegetables are delivered,” Business Insider reported last year, before the device was anywhere close to coming to market. “The company is raising so much money because it's not just creating a household product; it’s creating a whole agricultural arm to the business, which hints that the company plans to grow and supply the fresh produce around the world.” David Krane, a partner at Google Ventures, called it “the most complicated business that I’ve ever funded.”

Surely, more sober observers of the Silicon Valley funding circus would agree, Juicero looked like the top of the bubble. After all, funding seemed to be slowing down, and venture rounds for Wi-Fi-enabled kitchen appliances don’t happen in a correction. But no: this week, a “Keurig for tortillas” appeared on Kickstarter. The Flatev, which promises to turn dough from a Keurig-like pod into an authentic tortilla, doesn’t look like much more than a sophisticated Easy-Bake Oven. Yet the $400 tortilla-making machine has raised $5 million in seed funding (admittedly pocket change compared to Juicero’s $100 million in investments), and another $100,000 (and counting) from 500 supporters on Kickstarter. “Our value proposition is the marriage of quality and convenience,” Sandro Meyer, marketing director at Flatev, told Quartz.

It’s easy to mock such inventions as out-of-touch or self-indulgent. When it comes to these highly visible and heavily funded products and services, there is a clear disconnect between what consumers actually need, want, and can afford, and what venture capitalists seem to think people want, if they’re thinking of normal people outside the Bay Area at all. Venture capitalists can probably see themselves purchasing a Juicero and keeping it on their countertops, just another gadget in their toy chest. A single, working-class mom in the Midwest wouldn’t see the point. The median American household income is about $53,657; if you’re buying a Juicero for yourself and using it to make one $8 green juice seven times a week, you’re spending about 7 percent of your annual income on a juicer. The $700 Juicero does exactly one thing with its proprietary bagged fresh produce: juice those specific blends of fruits and vegetables. A $50 food processor does a number of tasks at a fraction of the cost. Starry-eyed venture capitalists may think they’re revolutionizing the agricultural business, but in reality, they're providing luxury services to a sliver of the top 10 percent of people in a handful of cities.

The problem with food tech start-ups goes deeper, however. The tech world places enormous value on utility and efficiency, which explains the millions of V.C. funding behind dystopian creations like the flavorless, beige meal-replacement slop Soylent and Go Cubes, caffeine boosts in adult-gummy-vitamin form for adults who apparently can’t bring themselves to make a cup of coffee. “Food was such a large burden,” Soylent founder Rob Rhineharttold the New Yorker, recalling his time working on another start-up. Thus, Soylent was born. But Rhinehart and people like him make up an incredibly small percentage of the population. Most Americans, even if they find themselves in a rush to make and eat a meal, don’t think of food as a “hassle” or an inconvenience; the fact that people spend so much time Instagramming their meals and watching how to prepare them via Facebook video seems to point to the contrary. Still, venture capitalists are obsessed with findings ways to smooth out those bumps and make basic human experiences “frictionless.” Where an average person thinks about drinking a cup of coffee or eating a traditional breakfast, some entrepreneurial investor sees a market that’s ripe for disruption, a place to save someone a few minutes, even if it means relinquishing their breakfast burrito for a generic canteen of milky nutritional beverage.

The preponderance of food-delivery companies, too, appears to fill a void in the market that start-ups and the V.C.s who fund them dubiously claim exists. Or, as one technologist overheard and tweeted, “SF tech culture is focused on solving one problem: What is my mother no longer doing for me?”

It’s hard to see how more than a dozen venture-backed services—companies including, but certainly not limited to DoorDash, Postmates, Maple, Munchery, Sprig, Caviar, Instacart, Blue Apron, Gobble, PeachDish, Purple Carrot, Hello Fresh, Plated, PlateJoy, and UberEATS—can all possibly offer the average American something they need. Many of these services don’t even exist outside of coastal hubs like New York City and San Francisco. But the funding doesn’t seem to be slowing down much. In 2015, according to analyst firm CB Insights, on-demand food-tech start-ups raised $5.7 billion globally, a 152 percent increase from the year before. This money and energy is being concentrated in an industry that already seems to be working just fine. It would behoove the people who dump hundreds of millions of venture dollars into this sector to consider who they’re funding these businesses for.